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The G7 finance ministers supported the idea of providing Ukraine with a loan secured by profits from frozen Russian assets to ensure funding for Kyiv after 2024.

Source: Financial Times, citing the draft communiqué of the ministers’ meeting, as reported by European Pravda 

The ministers’ discussions were based on a US proposal, which was circulated before the meeting in the Italian city of Stresa, to issue Ukraine a loan of about US$50 billion, to be repaid from the profits of the Russian central bank’s assets amounting to around €190 billion. 

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The ministers stated that they were “making progress” in working out options to “bring forward” the profits, according to the draft communiqué. They added that options for structuring the loan would be presented to the G7 leaders before the June summit.

They also promised to continue pressuring China to reduce industrial subsidies that they believe are driving Western competitors out of business, and stated that implementing the most significant global tax agreement in more than a century is a “top priority”.

The G7, a group of advanced economies that includes all major Western allies of Ukraine, aims to ensure funding for Kyiv in the long term, even after this year when crucial elections will take place on both sides of the Atlantic. 

According to people familiar with the negotiations, many details of the loan are yet to be agreed upon, including the amount, who will issue it, and how it will be guaranteed in case of Ukraine’s default or if the profits do not materialise. 

One official mentioned that Europeans are particularly concerned about “fair-risk sharing”, fearing that Europe will bear the brunt of the financial and legal risks and potential retaliatory actions from Russia, as most of the assets are located on the continent.

This week, the EU officially approved a plan to use interest from frozen Russian assets, which, according to estimates, could bring up to three billion euros per year to Ukraine.

Background:

• In February, the United States argued that G7 countries should fully seize frozen assets, but later abandoned this idea due to concerns from allies that it could set a dangerous legal precedent and prompt retaliatory measures from Russia.
• Earlier, Minister of Foreign Affairs Dmytro Kuleba stated that Ukraine insists on the confiscation and transfer to Ukraine of all frozen assets of the Russian Federation held in the West.

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Published 24 May 2024, 22:45 IST